Telecom gear makers want infra status, tax sops in Budget

The Telecom Equipment Manufacturers Association of India (TEMA), which represents local telecom product makers, also wants the government to levy a 5% cess on telcos to build a corpus for funding local telecom R&D and IPR creation.ET Bureau | January 19, 2016, 16:23 IST

Kolkata: In the run-up to the Union budget for 2016-17, local telecom gearmakers want finance minister Arun Jaitley to confer “infrastructure status” and extend tax sops under Section 35AD for domestic manufacturers complying with the government's PMA or `preferential market access' policy.

The Telecom Equipment Manufacturers Association of India (TEMA), which represents local telecom product makers, also wants the government to levy a 5% cess on telcos to build a corpus for funding local telecom R&D and IPR creation.

“Infrastructure status to domestic telecom equipment manufacturing companies complying with PMA provisions will help the industry to benefit from the incentives,” said TEMA chairman Emeritus N K Goyal in a statement Tuesday.

The PMA policy progressively calls for 100% local sourcing of security-sensitive telecom gear for government contracts. Goyal said the proposed levy of a “5% cess on telecom service providers” would help create a corpus to support telecom R&D and IPR creation for local product development.

Tema has also sought extension of tax sops under Section 35AD to local telecom gear makers complying with PMA norms to boost local manufacturing of electronics and telecom gear.

The industry lobby body, representing local gear makers, has also sought imposition of 25% duty on telecom/ICT products under the `Others’ category that are now being imported at zero duty. These would primarily include mobile network and broadband systems that are outside the purview of Information Technology Agreement (ITA) that India inked back in 1997.

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After PSU banks, the government is likely to infuse capital in two chronically ill telecom PSUs BSNL and MTNL, and the Union Cabinet is likely to take a decision on 4G spectrum allocation to them by the third week of the current month after DoT places the note before it for consideration.

At a high-level meeting at the PMO late Tuesday, it was also decided that the two telcos will frame a Voluntary Retirement Scheme (VRS) to reduce their employee strength, which will be followed by a reduction in the retirement age to 58.